These stocks post solid returns during sluggish economic times like we’re going through now
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Investors have been scrambling to find ways to protect their assets as the fear of an economic downturn grows. As the nation dealt with the introduction of the Covid-19 variant, the U.S. economy contracted more than 1 percent in its first quarter. Atlanta Federal Reserve’s GDPNow model shows a 0.9% gain in economic growth. This is similar to the economy being considered as in trouble for the second quarter. The estimate now is lower than the estimated 1.3% rise that occurred a week ago. The Federal Reserve raised interest rates in an effort to curb inflationary pressures that have not been seen for decades. This has resulted in a slowdown of economic activity. However, some stocks can still earn solid returns under these conditions, as history has shown. To find them, CNBC Pro screened for S & P 500 stocks that posted positive total returns (price gains plus dividends) during the last five periods of sluggish economic growth. The median return of each stock during these periods was then used to rank them. FactSet data was used for the screen. Slow growth is defined as GDP below 2% and above 2% for consecutive quarters. The following period were examined: Q3-Q4 2018, Q4 2016–Q1 2017, Q3-Q4 2015., Q3-Q4 2015.; Q3–Q4 2015; and Q2-Q3 2012. These are the stocks with the highest returns over these time periods. This search returned a variety of utility stocks and consumer staple names like Clorox, Hershey and Kimberly-Clark. Kimberly-Clark’s median return has been 17% in the past five periods of economic slowdown, while Hershey Atmos and Clorox have returned respective 15.8%. Clorox saw a median return of 15.2% during this time frame. Atmos shares and Hershey have outperformed in this year’s performance, increasing 9.5% and 11.8%. Kimberly-Clark is down 8% in that time, but that’s still better than the S & P 500’s more than 12% drop. Clorox shares are down 22.6% since last year. VeriSign was the top web domain registry company with a median rate of return of 24.4%. Ulta Beauty placed second with an average return of 19%. VeriSign stock is down 29% by 2022, as investors shun tech stocks due to rising rates. Ulta Beauty’s stock, however, has risen 2.7% over the same period. Coca-Cola, a component of Dow Jones Industrial Average, also made it to the top of the list. Its median return was 10% during the five periods when there has been low economic activity. With a 6.6% increase in stock price, the company is performing well. Coca-Cola posted a 16% increase in revenues year-over-year late April and kept its outlook despite inflation. The list also includes Pinnacle West Capital, McCormick, Ameren, Chubb, DTE Energy, American Tower Corporation., American Electric Power, and Eversource Energy. If history is anything to go by, these stocks can offer solid returns and boost your portfolio.
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